Fundamentally Strong Stocks
Fundamentally strong stocks in India are listed for the companies with a strong hold and are stable. As the name suggests, it's all about being fundamentally strong. Let's understand this with an example. If you are an architect and given the job of building a complex, what is the first thing that you will start with? It is the base, the foundation. Because if the foundation is not strong, the entire structure may collapse anytime.
That is how every investor should think about their portfolios as well. In your portfolio, you may have all types of stocks. Some of them will perform, and some will not. But keeping stocks of fundamentally strong companies will help maintain your portfolio, irrespective of the market situation. In this article, let's understand everything about fundamentally strong stocks.
What are Fundamentally Strong Stocks?
Fundamentally strong stocks are for the companies that will continue to grow and be in the business no matter the market situation. These stocks will perform well even when the market is rough and others are underperforming. Because of some of the inherent traits, they do their business smoothly. Factors such as their financial capital, quality management, and product or service in demand make them build their strong foundation. Below you will also see the best fundamentally strong stocks to invest in India in 2023.
How to Find Fundamentally Strong Stocks?
There can be numerous reasons behind a stock being fundamentally strong. Below are some ways you can easily find out the fundamentally strong stocks in 2023.
1. Capital and Debt
For any company to be fundamentally strong, they need a lot of capital to run its business, make purchases, pay salaries, fund new projects, and for various other reasons. And if the company has no capital, it will borrow money for its daily needs, thus making them go into debt.
Hence, before deciding which fundamentally strong stocks to go with, you should use the debt-to-equity ratio to determine the amount the company has borrowed against its capital.
Companies are built with the people who work in them. No company can perform without experts and industry specialists. Therefore, while capital and debt are necessary, management is also crucial. If the management, especially the top leadership team, is weak, companies' chances of surviving in the challenging market will be bleak. So, before finalizing the best fundamentally strong stocks in India, check who is part of its management and their experience running the company.
Who would want to be associated with a company which is not making profits? Like the other two, this is an equally important factor in deciding the best fundamentally strong stocks. You can measure the profitability through ROE or how much they have paid their shareholders and investors in the last couple of years. If these people are making money, the company is making profits.
List of 10 Fundamentally Strong Stocks of 2023 in India
Below is the fundamentally strong stocks list for 2023 for your reference.
8. Infosys Ltd
Top 10 Fundamentally Strong Stocks of 2023 in India
Now that you have seen the top fundamentally strong stocks in 2023 in the above list, it is time to look at some of the features that make them fundamentally strong stocks.
Nestle India Ltd.
Tata Consumers Products Ltd.
Bajaj Finserv Ltd.
Bajaj Finance Ltd.
JSW Steel Ltd.
Titan Company Ltd.
Apollo Hospitals Enterprises Ltd.
Reliance Industries Ltd.
Overview of Top 10 Fundamentally Strong Stocks of 2023 in India
It is important to understand the company overview to decide which fundamentally strong stocks to invest in.
Below are the details that may come in handy while making the decision:
1. Divis Laboratories
Divis Laboratories is a leading Indian manufacturer of pharmaceutical ingredients. It is a multinational company offering high-quality products to India and 95 other countries. The company is focused on developing new processes to produce active pharma ingredients and intermediates. Below are some more details:
● Total Liabilities - INR 33,000m
● Total Assets - INR 13374 CR
● Capital Expenditures - 12.07%
● Dividend Yield - 0.94%
● Sector PB (Price to Book) - 7.21
● Sector Dividend Yield - 0.92%
2. Nestle India Ltd
Nestle India Limited is an Indian subsidiary of the Nestle Group. The Nestle Group is a Swiss multinational company headquartered in Gurgaon, India. The company produces foods and beverages and has been in a relationship with India since 1912. Nestle India Ltd. was incorporated in 1956, with its first plant in 1961 in Moga. Below are some other details:
● Total Liabilities - INR 3079.75 CR
● Total Assets - INR 8978.74 CR
● Capital Expenditures - 57.04
● Dividend Yield - 1.08%
● Sector PB (Price to Book) - 80.63
● Sector Dividend Yield - 1.1%
3. Tata Consumers Products Ltd
TATA consumers products is a company focused on manufacturing food and beverages and uniting these interests under the TATA group umbrella. Some of its available products are TATA Salt, TATA Tea, Tata Sampann, and TATA Tetley. The company is also focused on producing highly sustainable and innovative products. Some of its facts:
● Total Liabilities - INR 1535.66 CR
● Total Assets - INR 14226.21 CR
● Capital Expenditures - 2.97
● Dividend Yield - 0.86%
● Sector PB (Price to Book) - 3.99
● Sector Dividend Yield - 1.44%
4. Bajaj Finserv Ltd
Bajaj Finserv Ltd. is a wholly-owned subsidiary that makes alternative investments in start-ups and properties. It is an Indian non-banking financial service focused on lending and asset management. The company offers different SME finance, consumer finance, and commercial lending. While looking for the best fundamentally strong stocks, check their details below:
● Total Liabilities - INR 40.45 CR
● Total Assets - INR 4438.42 CR
● Capital Expenditures - 28%
● Dividend Yield - 0.03%
● Sector PB (Price to Book) - 8.21
● Sector Dividend Yield - 0.53%
5. Bajaj Finance Ltd
It is a deposit-taking, non-banking financial company. It is registered with RBI and has a diversified lending portfolio. The company is also listed on NSE and BSE. Bajaj Finance is a subsidiary of Bajaj Finserv and has a strategy and structure like a bank. You can check some of its details below:
● Total Liabilities - INR 32,037 CR
● Total Assets - INR 168,016 CR
● Capital Expenditures - 28%
● Dividend Yield - 0.34%
● Sector PB (Price to Book) - 8.21
● Sector Dividend Yield - 0.5%
6. JSW Steel Ltd
JSW Steel Ltd. is a multinational steel producer & is a famous company of the JSW Group. JSW Steel became India's second-largest steel company after the ISPAT Steel & Jindal Vijayanagar Steel Limited merger. The company operates manufacturing plants in Karnataka, Tamil Nadu, and Maharashtra, India. Here are some of the details:
● Total Liabilities - INR 576 billion
● Total Assets - INR 1.96 lakh CR
● Capital Expenditures - INR 49,000 CR
● Dividend Yield - 2.42%
● Sector PB (Price to Book) - 3.2
● Sector Dividend Yield - 2.4%
7. Titan Company Ltd
It is India's most prominent jewelry brand maker and is involved in manufacturing watches, eyewear, jewelry, and precision engineering. They are primarily into producing consumer goods and are a retailing company. Titan is a part of Tata Group Limited, founded in 1984. Some of its information are as follows:
● Total Liabilities - INR 9559 CR
● Total Assets - INR 20137 CR
● Capital Expenditures - 2.52
● Dividend Yield - 0.29%
● Sector PB (Price to Book) -1.79
● Sector Dividend Yield - 0.29%
8. Infosys Ltd
Infosys is a global IT and consulting company formed in 1981 and is listed on NYSE with more than 343K employees. It is also a leader in next-generation technology, consulting, and digital services. They have clients in more than 50 countries providing business consulting, technology, and outsourcing-related services. If you are considering it as a fundamentally strong stock, here are some of its details:
● Total Liabilities - INR 27442 CR
● Total Assets - INR 101337 CR
● Capital Expenditures - INR 290 million
● Dividend Yield - 2.78%
● Sector PB (Price to Book) -6.74
● Sector Dividend Yield - 3.6%
9. Apollo Hospitals Enterprises Ltd
Headquartered in Chennai, Apollo Hospitals Enterprises Ltd. is a multinational healthcare group. The company has hospitals, pharmacy chains, diagnostic centers, primary care, digital healthcare services, and telehealth clinics. Established in 1983, there are close to 72 hospitals and many other centers. Below are its details if you are considering it as one of the best fundamentally strong stocks:
● Total Liabilities - INR 1189.20 CR
● Total Assets - INR 10408.20 CR
● Capital Expenditures - 45.71
● Dividend Yield - 0.21%
● Sector PB (Price to Book) -10.55
● Sector Dividend Yield - 0.4%
10. Reliance Industries Ltd
Reliance Industries Ltd. is in hydrocarbon exploration and production, petrochemicals, retail and telecommunications, and petroleum refining and marketing. It operates through different segments such as Oil to Chemicals (O2C), Retail, Digital Services, Oil & Gas, Financial Services, and others. Below are its details:
● Total Liabilities - INR 200,982 CR
● Total Assets - INR 878,674 CR
● Capital Expenditures - INR 1 trillion
● Dividend Yield - 0.34%
● Sector PB (Price to Book) -1.8
● Sector Dividend Yield - 0.34%
How to Invest in Fundamentally Strong Shares in the Indian Stock Market?
To invest in fundamentally strong shares in India, below are the steps:
1. You must choose either BSE or NSE to invest in one of the fundamentally strong stocks.
2. You can buy these stocks directly from the company website or any third-party platform.
3. You will have to submit your details, such as PAN, Aadhar, and bank details to choose the stocks of your preference.
Important Things to Remember Before Investing in the Best Fundamentally Strong Stocks
Before you decide to lock any one of the fundamentally strong stocks, here are a few things for you to remember:
1. Always do proper research before choosing any particular stock.
2. If you feel that the stock is not performing, do not keep it in your portfolio for long and try to look for a replacement.
3. Refrain from trying and overspending, assuming the stock will give you returns.
1. How do you analyze a stock before buying it?
Before you decide to buy any fundamentally strong stocks, check some vital elements such as debt-to-equity ratio, return on equity, market capital, and dividend yield, among others.
2. What are the three fundamental analysis layers?
When deciding which fundamentally strong stocks are the best, follow the three fundamental analysis layers. They are economic analysis, industry analysis, and company analysis.
3. What are the five fundamental analytical steps?
Below are the five fundamental analytical steps:
1. Screening the stock's financial ratio
2. Learn about the company and its operations
3. Check the company's financial statements
4. Look for any danger signs
5. Compare the company with competitors
4. How do you research stocks before investing?
Before investing, you should check the company's profile, financial statement, valuation, and competitors in the market.